Personal Development

Is Financial Procrastination Derailing Your Life Plans?

What do Willie Nelson, MC Hammer, and Allen Iverson have in common? Well, what their life situations have in common is that it doesn't matter how much you make, but how much you keep.

To be sure, these individuals came into vast fortunes, only to see their wealth dwindle in a short period of time. And certainly, it's hard to believe that these individuals didn't have trusted advisors who urged them to take actions that could help them preserve their fortunes.

But the truth is that there are likely many reasons why these individuals found themselves in their situations, and one reason likely has to do with financial procrastination.

Now, when you hear the word procrastination, you might immediately think of a pejorative, like a bad word or something with negative intent. But the truth is that procrastination simply reflects a subconscious (or sometimes conscious) decision to delay or postpone something you know you should be doing.

Indeed, you've likely experienced a moment where you've procrastinated on crucial financial work, like paying an important bill, balancing your checkbook, or taking care of some financial obligation, and these delays have likely cost you in lost time or money.

And the unfortunate truth is that in our society today, people who procrastinate are often viewed as lazy or unmotivated, which is why so few of us want to talk about this uncomfortable topic. But the fact is that there are many valid reasons why an individual may choose to put off doing an important task, especially when it comes to their money.

Do you or someone you know struggle with financial procrastination? Do you ever wonder why some people are really good at managing their finances while others get stuck in analysis paralysis and indecision or procrastination? 

Well, even if you only occasionally struggle with putting off paying your bills, gaining some insight into this underlying behavior, understanding how to rebound after a setback, and doing the work to maintain your positive momentum can help you stay the course on your path to mastering your financial independence journey.

Some Common Causes of Financial Procrastination

So then, what causes procrastination when it comes to money?

Well, while there are many reasons why someone may be a financial procrastinator, generally speaking, this act could be related to 1) your thought processes, 2) a struggle for instant gratification, or 3) your body's signal that something is just not right.

So as we dive deeper, let’s start by taking a look at your mindset’s role in financial procrastination.

Procrastination and Self Efficacy

Now,  when it comes to your mindset, Henry Ford was known to have said that, "whether you can, or you can't, you're right." That's because when it comes to finding the motivation to do what we know we're supposed to do, self-efficacy, or the internal belief we have about our ability to accomplish a task or goal, plays a significant role in our ability to get started on essential tasks.

Indeed, when we have high self-efficacy, we are more likely to take on challenging tasks and persist in the face of obstacles. Conversely, when we're dealing with low self-efficacy, we may be more likely to avoid or delay tasks, particularly those that we perceive as challenging or complex.

That's why in her book, "Mindset: The New Psychology of Success," Carol Dweck discusses how self-efficacy and mindset can influence procrastination.

Dweck explains that individuals with a growth mindset tend to have higher levels of self-efficacy. Indeed, these individuals are more likely to view setbacks and failures as opportunities to learn and grow rather than as a reflection of their own innate abilities. As a result, they are less likely to procrastinate, as they have confidence in their ability to succeed.

On the other hand, individuals with a fixed mindset tend to have lower levels of self-efficacy and are more likely to procrastinate. These individuals may avoid tasks or challenges they perceive as difficult or beyond their abilities because they fear failure and negative feedback.

Therefore, if you find yourself procrastinating, ask yourself if your mindset is holding you back from taking the next steps toward what you know you should be doing next.

The Struggle for Instant Gratification

Another factor to consider when you're trying to identify the underlying factor causing your procrastination is time inconsistency.

So, what is time inconsistency?

Well, have you ever made plans to get up early in the morning, only to find yourself struggling to get out of bed when your alarm goes off? Or how about the last time you made plans to get to the gym on the regular, only to find yourself with other obligations coming up when it's time to go?

If you've found yourself in this situation, then you're likely already familiar with the concept of time inconsistency and how it can influence procrastination.

Now, time inconsistency is a psychological concept that describes people's tendency to make present decisions that conflict with their long-term goals. This means that people often make more favorable choices in the short-term, but that can be detrimental to their long-term interests.

For example, imagine an individual who has a long-term goal of improving their credit score but struggles with time inconsistency when it comes to paying bills on time. They may have the intention to pay their bills when they're due and understand the importance of doing so for their long-term financial goals, but when the time comes to complete their task, they may simply put off the payment in exchange for a short-term reward such as spending money on leisure activities or delaying the discomfort of paying their bills.

Indeed, when it comes to procrastination, time inconsistency can cause people to delay tasks or critical decisions vital to achieving their long-term goals, even if they know that delaying the task will have negative consequences. This likely happens because the immediate rewards of avoiding the task (such as short-term pleasure or relief from anxiety) can be more compelling than the potential long-term benefits of completing the task.

Either way, time inconsistency is just a fancy way of saying that we prefer the immediate benefit of instant gratification over long-term rewards. And when it comes down to it, procrastination can be a coping mechanism for time inconsistency, as an individual delays essential tasks to avoid the immediate discomfort of starting important work. Even so, while it may seem harmless at first, when left unchecked, this behavior can negatively affect their long-term goals and financial well-being.

The Body Relation

One last potential cause for procrastination that we'll explore is looking at what's going on in the body. That's because, in some situations, procrastination, or the act of putting off what we know we should be doing, is often the body's way of telling us that something bigger is going on behind the scenes.

Indeed, psychologist Dr. Stephen Porges, in his Polyvagal Theory, suggests that procrastination is a form of self-protection when viewed in the context of the body's nervous system. Now, what this theory suggests is that inside our bodies, we have a special nerve called the vagus nerve that helps us respond to stress and danger. It has three parts, and each part helps our body react in different ways.

The first part, the ventral vagal, or "rest" state, helps us feel safe and calm. When we feel safe, our bodies can “rest and digest” and give us the confidence to take on challenges and meet new people.

The second part, the sympathetic nervous system, or "fight/flight" state, helps us prepare to fight or run away when we feel threatened. This part of the nerve helps us become more alert and ready to act quickly to protect ourselves. When our minds are in this state, we are more likely to take care of our finances from a place of panic, fear, and anxiety as we realize that a bill is past due.

The third part of the nerve, the "freeze" state, is like a last resort. That’s because when we feel like we can't fight or run away from danger, our bodies can shut down and become very still and quiet. In this state, we're more likely to feel shame, a sense of helplessness, hopelessness, or utterly trapped. In this state, we have an inability to focus and actually get work done.

Indeed, when the nervous system is dysregulated or underactive, we may experience difficulties in social interactions and have a reduced ability to cope with stressors, leading our bodies to physically shut down and produce what looks like procrastination.

Therefore, if you typically have a growth mindset and rank low in terms of impulsive behaviors but still occasionally struggle with financial procrastination, then take a moment to listen to your body and evaluate what's going on in your life.

If there are other things going on, like problems at work, challenges in your personal relationships, health issues, or other situations that are increasing your levels of anxiety, then these factors likely will inhibit your ability to take care of money issues until these matters are addressed.

Steps to Move Past Procrastination

So, now that you understand what might be driving your inclination towards procrastination, the next step to actually moving out of this state and towards your desired financial outcomes involves identifying ways to adapt whether your mindset, instant gratification, or your nervous system are causing you to procrastinate.

Shifting Your Mindset

And what can you do when you find yourself procrastinating on managing your finances and paying your bills because you are dealing with self-doubt? Well, recall that self-efficacy is the belief in one's ability to achieve a specific goal or outcome. When someone experiences self-doubt, they question their ability to succeed or feel uncertain about their competence in a particular area, but there are some things you can do to improve your self-belief and get your finances back on track.

First, you can start by educating yourself about the particular financial matter where you might be struggling. This could involve reading books, articles or taking online courses on topics such as budgeting, investing, and debt management. By learning more about the financial topics that give you anxiety, you can better understand how to manage your money effectively and improve your self-confidence in areas where you might be struggling.

Next, consider whether you're approaching your situation from a growth or fixed mindset. Remember, individuals with a fixed mindset believe that there’s little they can do to change their present circumstances, and are more inclined towards procrastination. And, what can you do if you find yourself in this situation? Well, to develop a growth mindset, you can take several steps based on Carol Dweck's book.

Well, to start, embrace challenges and view them as opportunities for growth and learning. Rather than shying away from complex tasks or new experiences, welcome them as chances to develop your skills and abilities. At the same time, recognize that setbacks and failures are a natural part of the learning process and can provide valuable feedback for future efforts.

Then, cultivate a love of learning and approach challenges with a sense of curiosity and a desire to gain new knowledge and skills. Indeed, take the time to focus on the effort and hard work you put into achieving your goals rather than attributing success or failure to innate abilities or talent.

As you go about this work, you'll also want to be kind and supportive to yourself, even when you encounter setbacks or failures. Dweck points out that developing a growth mindset can be a challenging process, and it's essential to be kind and compassionate to oneself during this journey. That's why she suggests you practice self-compassion by treating yourself with the same kindness and support you would offer a close friend or, if you're a parent, your own child.

Indeed, Dweck goes on to point out that self-criticism and negative self-talk can be detrimental to one's self-esteem and motivation, and can ultimately hinder growth and progress and undermine a growth mindset. That's why replacing negative thoughts with more positive and realistic ones that emphasize your strengths and potential is essential to building a growth mindset. At the same time, be open to constructive criticism, and actively seek out feedback from a trusted advisor and use it as an opportunity to learn and grow so you can improve your ability to prudently manage your finances.

Finally, surround yourself with individuals who encourage and support your growth mindset. This approach could include seeking out mentors and role models who exemplify a growth mindset and can provide guidance and support as you work to develop this mindset for yourself.

Dealing with Instant Gratification

Now, let’s take a moment to talk about dealing with instant gratification.

Earlier, we discussed the trouble with time inconsistency and how it can lead individuals to favor a present bias over difficult long-term decisions.

So then, what can you do if you find that you identify with instant gratification as a leading cause of your procrastination? Well, take a page from James Clear.

In his book "Atomic Habits," Clear provides proven methods for developing healthy habits and overcoming a present bias. And in his book, Clear focuses on creating a system for building habits that are sustainable and effective.

One key takeaway from Atomic Habits is that it's not about making big changes all at once but about making small, consistent improvements over time. This approach means focusing on small changes to your daily routines that will help you gradually move toward your goals.

For example, if you have a hard time getting started with paying your bills or even reviewing your finances on the regular, then set aside a thirty-minute block of time and do as much as you can within that window. Then, take a break and return to your task if you still have work that needs to be done. This approach can help you tackle a big task that might otherwise seem overwhelming in small, bite-sized pieces.

Another point emphasized by Clear is the importance of focusing on the habit-building process rather than just making the outcome the end-all-be-all. Clear emphasizes that building a habit is not just about achieving a goal but creating a system of actions that will help you consistently achieve your goals over time. That's why if you procrastinate when it comes to paying your bills, you may want to reframe this task as a ritual that is performed rather than a task that's marked off a to-do list.

Clear also emphasizes the importance of creating a supportive environment for building habits. This means surrounding yourself with people who will support your goals and help create an environment that makes it easier to stick to your habits.

For example, if you're trying to be more prudent with your finances, then spending time with individuals who like to talk about how much money they make or spend could tempt you to make poor choices and set you back from your financial goals. While you may not need to find new friends (or maybe you do), at the very least, be mindful of how others can affect your own decision-making process.

Lastly, Clear emphasizes that habits are not just about what you do but about who you become. By building habits that align with your values and goals, you can transform yourself into the person you want to be. To be sure, overcoming a present bias, or desire for instant gratification, means consistently evaluating the long-term benefits of achieving your financial goals and why it’s essential to keep your house in order at all times.

So then, from this perspective, ask yourself, “who do I want to become?” How will your life change if you commit to making this new habit of being disciplined with your money and doing what needs to be done at the right time? More importantly, how will people's perceptions of you change, and how would that make you feel?

Support Your Nervous System

Finally, if your financial procrastination is tied to life stressors that are putting your body into a freeze state, then you can take a few suggestions from Stephen Porges to get you moving forward.

Now, you'll recall that according to the Polyvagal Theory, our nervous system exists in three states, 1) rest and digest, 2) fight or flight, and 3) freeze. When we experience trauma or stress, our body's natural response is to activate the sympathetic nervous system, which can result in feelings of fear or anxiety to act or eventually activate the parasympathetic system, leading to a freeze or shutdown when the situation becomes untenable.

This state of dorsal shutdown can feel overwhelming and paralyzing, but there are ways to help our body transition to a more regulated parasympathetic, or "rest and digest" state.

So then, to move out of a frozen state, what you'll need to do is activate your fight/flight system, which is responsible for mobilizing your body to respond to stress and danger. Now, at this point you might be asking, why are we going to a stress response if we're trying to get to the "rest and digest" state?

Well, recall that the nervous system has a primal function to keep us safe. It's like those moments in a National Geographic episode when a gazelle trapped in the mouth of a lion. With nowhere to go, the gazelle goes into freeze mode as a way to cope with the trauma that it’s about to face. But the moment that the lion gets distracted and lets go, the gazelle can snap back into fight mode in its bid to break free and get to safety.

In other words, the gazelle goes into freeze mode to stay safe, but then it first snaps into fight/flight to get away from the lion before it can eventually return to life as normal in the rest and digest phase.

And, so, how do we move between these states?

Well, one way to activate this system is through physical activity or exercise, which can increase your heart rate and respiration, release adrenaline and other stress hormones, and promote feelings of alertness and energy. For example, going for a brisk walk, heading to the gym, or dancing to music can help stimulate the sympathetic nervous system and promote a sense of activation and help move you out of shutdown mode.

Another way to move out of a dorsal vagal state is through social engagement and connection. Polyvagal theory suggests that social engagement, such as eye contact, facial expressions, vocal tone, and touch, can help regulate the autonomic nervous system and promote feelings of safety and connection.

For example, calling a friend, joining a group activity, or participating in a social event can help stimulate the ventral vagal system, which is responsible for social engagement and connection, and promote a sense of safety and belonging. And if you're in a place where you'd rather not engage with others, getting out into the public to people-watch can be a safe way to reset your nervous system as well.

Finally, breathing exercises and meditation can also help move out of a dorsal vagal state by promoting relaxation and reducing stress. Slow, deep breathing can stimulate the vagus nerve and promote feelings of relaxation and calm.

Keep the Momentum Going

Alright, so now that we've identified potential factors that could be causing your financial procrastination and have offered some suggestions for overcoming them, let's talk about a few things you can do to build momentum to avoid going off the tracks again.

Create a Conducive Environment

So, what can you do to keep the positive momentum of prudently managing your finances going for the long-term?

Well, to start, consider your environment and how it might affect how you deal with your finances. Marie Kondo, an expert in the art of tidying up and creating a joyful home, believes that your physical environment has a powerful impact on your habits and behaviors. So then, from a financial perspective, here are a few tips from Marie on ideally designing your physical environment to establish new financial habits, such as consistently paying your bills and prudently managing your finances.

First, create a dedicated financial management space in your home. You can do this by designating a specific area in your home for managing your money like a desk or a corner of your living room. And this space should be clean and organized, with all the tools and documents you need to manage your money easily accessible.

Next, use visual cues to remind yourself to pay bills, review financial statements, rebalance investments or take care of other essential financial tasks. You can do this by placing a brightly colored sticky note or a decorative object in your financial management space to remind you of when it’s time to take care of the essentials, and make these habits more automatic.

Also be sure to make it a pleasant experience by playing music, lighting a candle, or sipping a cup of your favorite drink while you take care of your finances. This way, paying bills doesn't have to be a chore, and you may even come to look forward to the experience.

Create New Habits, But Start Small

Now, earlier, we discussed James Clear's take on how habits can help overcome procrastination. Another take on habits comes from Charles Duhigg, who emphasizes the importance of starting small in his book "The Power of Habit." And Duhigg suggests that the key to forming new habits is to focus on small wins that give you a sense of progress and accomplishment.

For example, if you're trying to build a habit of going to the gym regularly, start by committing to just 10 minutes of exercise each day. In a similar way, if you have trouble with paying your bills or staying on top of your financial accounts, try paying one bill or reviewing one financial account per day.

The idea here is that once you've established the habit, you can gradually increase the amount of time you spend on it. This way, you're starting small, but you're building towards a larger goal.

Another key principle of habit formation is the habit loop, which consists of three parts: the cue, the routine, and the reward. The cue is the trigger that sets off the habit, the routine is the behavior or action that follows, and the reward is the positive outcome that reinforces the habit.

To establish a new habit of paying your bills on time, for example, you may want to consider creating a new habit loop. To accomplish this outcome, start by identifying a cue that will trigger you to pay your bills. This could be something as simple as setting a reminder on your phone or marking your calendar with the due date of your bills.

Then, once you have a cue in place, establish a routine for paying your bills. This could involve setting aside a specific time each week to pay your bills or automating your bill payments to automatically deduct them from your account.

Finally, make sure you reward yourself for paying your bills on time. This reward system could be something as simple as treating yourself to a favorite snack or taking a few minutes to relax and enjoy a cup of your favorite drink after you've paid your bills.

By creating a new habit loop for paying your bills, you can establish a new habit that will help you stay on top of your finances and avoid late fees and other financial penalties. With practice and persistence, you can make this new habit a permanent part of your life and enjoy the benefits of better financial management.

Treat Yourself

Finally, make sure you don't miss out on the earlier point about rewarding yourself for the progress you're making. Indeed, in "18 Minutes: Find Your Focus, Master Distraction, and Get the Right Things Done," Peter Bregman emphasizes the importance of incorporating rewards into the habit-creation process as a way to reinforce positive behavior.

According to Bregman, when we engage in a behavior that we find rewarding, we are more likely to repeat that behavior in the future. Therefore, he suggests that we identify specific rewards that we can give ourselves for completing a desired behavior or task.

For example, if your goal is to review your bank account transactions once a week, you might reward yourself with a pizza delivery or takeout from your favorite restaurant. Alternatively, if your goal is to balance your checkbook by a specific deadline, you might reward yourself with a night on the town or a big-ticket purchase once you've finished your work.

Bregman also emphasizes the importance of making the rewards tangible and immediate. Indeed, rather than waiting for a long-term goal to be achieved, he suggests that we reward ourselves for making progress along the way. Again, it's the small wins on a daily and weekly basis that move us closer to our long-term financial goals.

By incorporating rewards into the habit-creation process, Bregman believes that we can create positive habits that are sustainable and enjoyable rather than feeling like a chore. Additionally, he suggests that we track our progress and celebrate our successes, which can also serve as a form of reward and motivation to continue positive behaviors.

Is Financial Procrastination Putting Your Life Plans Off Track?

Make no mistake, financial procrastination can significantly impact your money and relationships if left unchecked. It can lead to missed payments, late fees, and even ruin relationships. And while there are many reasons why people procrastinate, understanding the underlying causes can help you take steps to overcome this behavior.

These approaches include addressing mindset, working to avoid instant gratification, and by listening to your body, you can start to break free from the cycle of financial procrastination and take control of your finances. Remember, it's never too late to start taking action and making positive changes in your financial life.

Indeed, by shifting towards a growth mindset, developing sustainable habits, and supporting your nervous system, you can overcome the barriers that are preventing you from taking action and moving towards your desired financial outcomes.

Remember, sometimes all it takes is small, consistent steps and being kind and compassionate towards yourself during this process to make sustainable gains. And, with a little patience and persistence, you can take one step closer to becoming the master of your financial independence journey.

by Peter Donisanu

Your Playbook: A Healthier Money Relationship

Money alone will not buy you lasting joy. Money alone will not solve many of your most profound relational problems. Money alone will not help you discover who you are or what you should do in life. More often than not, however, many individuals deceive themselves, believing that their pursuit of money can help them solve these and other life problems.

Don't believe me?

You can ask the well-paid executive who spends too much time at the office and is about to lose his family. You can ask the professional athlete who worked their whole life to make it to the big time, only to find their successes wanting. You can ask the lottery winners who report little change in their overall happiness after winning a million dollars.

Make no mistake, money is essential to getting the things we want out of life, but acquiring money is only one component in building your ideal life.

And a common misbelief that some individuals hold is that the act of acquiring wealth will somehow bestow all sorts of gifts upon their lives. The often sad reality is that many individuals who pursue this end, often spend their time chasing more money in hopes that they one day will somehow find what's missing in their lives.

It's called the hedonic treadmill: without a purpose, the more you make, the more you want to spend and, therefore, the more you want to earn so that you can spend even more.

The fact is that money, in itself, is simply a tool. The acquisition and possession of money does not bestow magical powers to the individual holding it. Certainly, money can change a person's current life satisfaction to a certain extent. This recognition is described in the book, "Your Money or Your Life," and illustrates the relationship between money spent and personal satisfaction called the fulfillment curve.

What the authors show in their work is that there is a diminishing return between the amount of money spent and the fulfillment one receives from spending that money.

For example, a needy individual's life satisfaction can change overnight when they can earn $2,000 per month to meet their daily survival needs. Their fulfillment level continues to go up if they earn an extra $500 per month to pay for creature comforts, and it continues rising as their ability to spend on luxuries increases – up to a point.

Once an individual hits the level of luxury spending, it takes an increasingly higher amount of money spent to move the dial higher in terms of life satisfaction. From an economic perspective, we call this the law of diminishing returns. Once our spending exceeds the point of "enough", the consumption can produce a negative effect.

Indeed, one study from a couple of researchers at Georgetown University and the University of Birmingham analyzed measures of happiness and income levels using data from 2010 to 2015. Their study found that measures of happiness rose with income up to a certain point before falling. Indeed, in their study, the researchers found that individuals with higher reported incomes often reported lower happiness compared to those with lower incomes.

So then, can we say that to be happy means that we need to spend less money and live like a hermit? 

Not at all.

The point here is that money does not give your life purpose. It's a tool that helps meet essential needs and wants.

That's why once your essential needs and wants are met, it's time to give your money purpose by identifying your personal values and creating a life purpose that answers big questions like, "what is life asking of me." If you still need to identify your values and define your life purpose, be sure to check out our resources from the January and February FI|Mastery Journey action items.

Give Your Money Purpose

For now, however, the next leg of the journey for giving your money purpose should begin by assessing whether you're using your money to create your ideal life. That is, an ideal life that is aligned with your values and purpose.

So, what does it look like when you have your money purpose? Here are some examples:

Giving money purpose means knowing…

• why you work in a chosen profession
• where you are spending and what you are spending my money on
• why you are saving money for the future
• how you will feel when you can use your money to make critical life change
• that your kids won't have debt burdens when they go to school
• that you are leaving something behind for future generations to enjoy
• that you can spend money without feeling guilty
• that no matter what happens in the economy or markets that, your financial situation is secure
• that you can help out a friend or family member when the financial need arises
• that you have the resources you need to pursue your hobbies and passions
• that you have the time to do what you want when you want
• that you have options to make life changes
• that no job or relationship will ever control your ability to live a fulfilling life
• that you can give your family life experiences that they can treasure

What purpose does your money have?

Take a moment to consider the values and purpose that you defined for your life. Then, think about the near- and long-term life goals that you've defined for your life journey.

Now, ask yourself, "how can I use my income and savings now and into the future to achieve my life goals?"

Do you need to increase your earning power, save more money or reduce your spending to achieve your goals? Maybe a combination of all three?

Your values and life purpose are the Northstar for where you're heading in life directionally. The life goals you defined over the past couple of months set the milestones to tell you that you're moving in the right direction. Your money decisions, thereafter, is the fulcrum for moving you closer to the overall purpose that you've defined for your life.

Either way, giving your money purpose is the first step in getting off the hedonic treadmill of mindlessly acquiring more money simply to spend it. Alternatively, it can give you the push you need to begin spending more intentionally if you're a natural saver and worry too much about overspending.

Save and Spend with Confidence

A key benefit of knowing your money's purpose is the ease of spending and savings decisions.

Why?

Because always knowing your money's purpose reduces your need to overanalyze each and every spending or savings decision that you make from one moment to the next. That's because when you have a base from which you make spending and savings decisions, making money choices becomes easier. And there's an added benefit: it reduces overall cognitive load.

Now, in psychology, the term cognitive load refers to the amount of work that your brain has to go through to think through a complex task. Or, put a different way, it's the amount of mental energy used to process information.

For instance, tasks that impose a heavy load on short-term memory, such as calculating, planning, and quick decision-making, result in less-than-ideal outcomes when time is a factor in the face of new or changing information.

So then, the two critical factors here are 1) how familiar you are with the information and 2) the amount of time you have to make a decision. When you don't have enough time or information to make a decision, you typically revert to more common or familiar behaviors. And when it comes to your finances, these situations can lead to making decisions based on old money scripts.

Nevertheless, when you define a new purpose for your money that aligns with your values, making money decisions becomes easier because you have one less criteria against which to evaluate your decision.  

For example, let's assume that a friend asks you to join them on a trip, and it will cost you $10,000. You consider this person a good friend and don't want to disappoint them. The request is short notice, but it could be a great experience. You need to make a decision in the next few days and know that you can just put the purchase on a credit card and deal with it at some future point in time.

So, what do you do in this situation?

Well, you have a couple of options. Your initial instinct may be to evaluate the pros and cons, including what the trip may cost you in terms of time and financial resources. But if you worry too much about this approach, you could end up forgoing the trip to avoid making a bad financial decision.

Your next option is to evaluate this potential spending decision within the context of your life values as the guiding light and the new money script that you've defined to guide your spending decisions. You'll recall from previous topics we discussed that money scripts are internal beliefs you hold about money.

For instance, you can begin by asking yourself, "does this spending decision reflect the purpose that I've defined for my money?" If you've been working on amending your money script as we've described in previous articles, then this process will act as a prompt to queue up how you might want to respond to the money situation in front of you.

If one of your values includes nurturing important relationships, then the decision to spend money on the trip might be rather straight forward so long as the spending does not take away from your other financial priorities.

Dealing with Analysis Paralysis

Giving your money purpose means being intentional with your spending and savings decisions. This process begins with a firm grasp of your life values, understanding what life is asking of you, and amending your money scripts to align with your values and purpose.

Then, as you develop a new awareness of your money scripts, begin using them actively in your everyday financial decisions so you can reduce the friction involved in making wise money choices.

These can include times when you're about to make a purchase but feel guilty about the spending.

For instance, do you spend too much time analyzing the utility of a spending decision and struggling to make a choice? This is a common experience known as analysis paralysis, which is the inability to make a decision due to overthinking and overanalyzing. While taking time to consider your options can be helpful, it's important to recognize when it's time to decide and move forward.

Here are a few steps you can consider to reduce analysis paralysis:

Identify Your Values

Identifying your values is an essential first step to spending money with confidence. Values are the principles and beliefs that guide your behavior and decision-making. They are unique to each individual and can include anything from family, community, career, and personal growth. When considering a spending decision, take a moment to reflect on how it aligns with your values. Ask yourself, "Is this purchase in line with my values? Does it support my long-term goals?"

Prioritize Your Goals

Prioritizing your goals is another crucial step to spending money with confidence. Your goals should be aligned with your values and help you to achieve your desired outcomes. Take time to identify your short-term and long-term goals, and then rank them in order of priority. When considering a spending decision, ask yourself, "Does this purchase help me achieve my goals?"

Set a Budget

Setting a budget can help you make more confident spending decisions. A budget is a plan for allocating your income, expenses, and savings. Setting a budget allows you to make a spending decision aligned with your values and goals without worrying about overspending. When considering a spending decision, ask yourself, "Does this purchase fit my budget?"

Trust Your Gut

Sometimes, our instincts can be a valuable guide when making decisions. If you're struggling with analysis paralysis, taking a step back and listening to your gut can be helpful. Your intuition can help you identify what is most important to you and guide you toward making a confident decision.

Don't Overthink It

Finally, it's important not to overthink a spending decision. While it's essential to consider how a purchase aligns with your values and goals, it's also important to spend only a little time analyzing the decision. Remember that perfection is not always possible, and sometimes it's better to make a decision and learn from the outcome.

Saving and spending with confidence often involves overcoming analysis paralysis. By identifying your values, prioritizing your goals, setting a budget, trusting your gut, and avoiding overthinking, you can make spending decisions that align with your values and goals.

Remember that spending money is not just about logic but also about what is important to you as an individual. So, the next time you struggle to make a spending decision, take a step back, consider your values and goals, and trust your instincts.

Spending and Saving Intentionally

Money is a powerful tool that can help you achieve your life goals. However, too often, we pursue money as an end goal rather than as a means to an end. This approach can lead to a never-ending cycle of chasing more money and can lead to feelings of dissatisfaction and unfulfillment.

And adding to these feelings of guilt and dissatisfaction are times when spending and savings decisions go sideways because of unexpected life events.

So what can you do to finally give your money purpose, save and spend with confidence, create your ideal life, and get back up when you have a financial setback?

To start, make a plan to avoid having a financial setback in the first place. Here are a few points you may want to consider to get ahead of financial setbacks.

Understanding Money as a Tool

First, understand that money is a tool. Indeed, money is a tool that you can use to accomplish your desired life outcomes. Whether it's purchasing a home, traveling, starting a business, or supporting a cause, money can provide the means to achieve these goals. However, it's essential to recognize that money is not an end goal in itself. It's a tool that can be used to achieve the life outcomes that are important to us as individuals.

Identifying Life Outcomes

In order to effectively use money to achieve what's essential in your life, you'll need to identify tangible goals. This work goes back to our initial work involved in identifying your values and planning your life purpose. And the work often involves figuring out what you want to achieve in your life by first identifying what life may be asking of you. This work can involve sorting through your passions and interests and the kinds of experiences you want to have. When you identify these outcomes, you can then determine how money can be used to achieve them.

Creating a Financial Plan

Creating a financial plan is essential in effectively using money to achieve life goals. A financial plan is a roadmap for allocating your income, expenses, and savings to achieve your desired outcomes. It should include a cash management strategy, a savings plan, an investment strategy to grow your wealth and a set of action items that need to be accomplished in the near- and long-term. Indeed, a financial plan provides clarity and direction and can help you make decisions that are in line with your life goals.

Prioritizing Spending

Once you have identified your life outcomes and created a financial plan, the next step is to prioritize your spending. When you prioritize your spending, you ensure that your money is being used to achieve your most important goals. Prioritizing spending can involve making choices such as saving for a down payment on a home instead of eating out or putting money towards a travel fund instead of buying a new car.

Living Below Your Means

Living below your means is another critical component of effectively using money to achieve life goals. This means spending less than you earn and avoiding the cycle of debt. Living below your means can involve making choices such as downsizing your home, driving an older car, or cutting back on unnecessary expenses. Ultimately, living below your means gives you more financial freedom to pursue your life goals.

Track Progress Regularly

Regularly tracking progress is critical to holding yourself accountable for achieving financial goals. Monitoring spending and savings regularly and adjusting the plan as needed is crucial because it provides an opportunity to celebrate progress toward goals and make changes to the plan to ensure continued progress.

Share Goals with an Accountability Partner

Sharing financial goals with an accountability partner is an excellent way to hold oneself accountable. An accountability partner can offer support, motivation, and guidance in achieving financial objectives. Additionally, sharing goals with an accountability partner can help you stay focused on your goals and maintain momentum toward achieving them.

Set Consequences for Not Achieving Goals

Setting consequences for not achieving financial goals is another way to hold oneself accountable. This could involve setting a consequence such as donating money to a charity or performing a challenging task. The consequence, however, should be significant enough to provide motivation to achieve the goal and be tied directly to the goal being pursued.

Holding oneself accountable for achieving spending and savings goals is essential for building a stable financial future. Creating a clear and measurable plan, using automated savings tools, tracking progress regularly, sharing goals with an accountability partner, and setting consequences for not achieving goals are all effective ways to hold oneself accountable.

By implementing these strategies, you can develop a sense of ownership and commitment to your financial goals, ultimately leading to greater financial stability and success.

Signs that Your Savings and Spending are Out of Alignment

Now, making financial choices that align with personal values is essential for creating a fulfilling and satisfying life. Indeed, it can be challenging to ensure that financial choices are in alignment with one's values. 

However, once you figure out how to use your money to create your ideal life, what can you do if you still do not feel good about your financial choices or experience a setback in your plan? 

Well, feeling anxious, stressed, or guilty about your financial decisions can indicate that you're not making choices that are in alignment with your values. That's why it's essential to pay attention to these feelings and reflect on how your choices may be misaligned with your values.

The fact is that life does not move in a linear fashion. Indeed, we all have setbacks occasionally that threaten our best-laid financial plans. But with a little foresight, you can get ahead of those setbacks and quickly get your savings and spending plans back on track when the inevitable roadblock pops up.

Here are some things you may want to consider when you face inevitable challenges with your financial goals:

Don't Lose Hope When Plans Go Sideways

Holding oneself accountable for achieving spending and savings goals can be challenging, especially for individuals who struggle with seeing their plans through. However, accountability is crucial for achieving financial goals and building a stable financial future. 

Evaluate Whether You're Prioritizing Instant Gratification Over Long-Term Goals

Prioritizing instant gratification over long-term goals is another sign that your financial choices may be misaligned with your values. If you consistently choose short-term pleasure over long-term satisfaction, it's a sign that you may not be making choices that align with your values. Pay attention to your choices and reflect on whether they align with your long-term goals.

Your Spending is Not Supporting Your Priorities

If your spending is not supporting your priorities, it's a sign that your financial choices may not reflect your values. If you prioritize spending time with family and friends, but your spending habits are preventing you from doing so, it's a sign that you're not making choices that are in alignment with your values. Pay attention to how your spending aligns with your priorities, and make adjustments as needed.

You're Not Saving Enough for Your Future

Not saving enough for your future is another sign that your financial choices may be misaligned with your values. If you prioritize financial stability and independence, but you're not saving enough for retirement or emergencies, it's a sign that you're not making choices that are in alignment with your values. 

Your Financial Choices are Compromising Your Health or Relationships

Another sign that your spending might be out of alignment with your values is if your financial choices compromise your health or relationships. For example, if you prioritize physical health but are overspending on food and dining out, it's likely a sign that you need to make choices that align with your values.

Bouncing Back from Financial Setbacks

Make no mistake, falling back on old financial habits can be discouraging, especially if you've tried sticking to a savings and spending plan in the past but have come up short. Finding the motivation to get back on track and work towards a recovery plan can be difficult in times like these. 

So what can you do if you find yourself in this situation?

Practice Self-Compassion

Practicing self-compassion is essential in motivating oneself toward a recovery plan. Self-compassion involves treating oneself with kindness, care, and understanding. It means acknowledging that financial setbacks are a part of the recovery process and reframing the situation with self-compassion rather than self-criticism. By practicing self-compassion, you can shift your mindset towards a positive and constructive perspective, which can provide motivation for moving forward.

Refocus on Your Life Goal

Refocusing on your life goals is essential in motivating oneself after a financial setback. This work involves reevaluating the goals you've set for the year, breaking them down into smaller, achievable steps, and identifying what led to your financial setback. Once these steps are established, you can shift your focus towards the process of achieving your goals, rather than the setback. By shifting focus towards the goal and the positive steps that can be taken, you can create a sense of momentum and motivation for moving forward.

Use Positive Self-Talk

Using positive self-talk can also be a powerful motivator when recovering from a financial setback. Positive self-talk involves speaking to oneself in a kind, compassionate, and encouraging manner. This can include affirmations such as "I am capable of achieving my goals" or "I am making progress, even if it's slow." By using positive self-talk, you can create a sense of self-motivation and self-confidence that can help you overcome setbacks.

Celebrate Small Wins

Finally, celebrating small wins is an effective way to motivate oneself after a financial setback. Small wins can include achieving a smaller goal, completing a step towards a larger goal, or making progress towards a habit change. By celebrating small wins, you can create a sense of achievement and momentum, which can motivate you to continue making progress towards your long-term financial plan.

Money is a tool that can be used to achieve life outcomes. However, it's essential to recognize that money is not an end goal in itself. By identifying life outcomes, creating a financial plan, prioritizing spending, and living below your means, you can effectively use money to achieve your desired outcomes. When money is used as a tool rather than pursued as an end goal, you're more likely to achieve a sense of fulfillment and satisfaction in your life.

And aligning financial choices with personal values is essential for creating a fulfilling and satisfying life. If you're not feeling good about your financial choices, prioritizing instant gratification over long-term goals, spending in ways that do not support your priorities, not saving enough for your future, or compromising your health or relationships with your financial choices, it's a sign that your financial choices may be misaligned with your values. Paying attention to these signs and reflecting on how your financial choices align with your personal values can help you make more fulfilling and satisfying financial choices.

And finally, recovering from a financial setback can be challenging, especially if you've tried to make financial progress in the past and seem to be repeating the same mistakes over and over again. However, you can motivate yourself toward a stable savings and spending plan by practicing self-compassion, refocusing on the goal, using positive self-talk, seeking support from others, and celebrating small wins. Indeed, by staying focused on the process of achieving your goals and reframing setbacks as opportunities for growth and progress, you can create a sense of momentum and motivation towards becoming the master of your financial independence journey.

by Peter Donisanu

Crush Your Financial Resolutions by Becoming Rather than Doing

Who doesn’t like a fresh start?  The beauty of New Year’s Resolutions is that we all have an opportunity to fully commit to losing weight, getting organized, or finally saving more money at the turn of the calendar year. 

In fact, resolving to change one’s life for the better is a tradition that goes back millennia, starting with the ancient Babylonian 12-day New Year’s celebration.  During the Akitu festival, Babylonians promised the gods to return borrowed items and pay down their debts.  In more recent developments, some historians note clippings from an 1813 Boston newspaper documenting what could be considered the first contemporary use of the “New Year’s Resolution”:

“And yet, I believe there are multitudes of people, accustomed to receive injunctions of new year resolutions, who will sin all the month of December, with a serious determination of beginning the new year with new resolutions and new behavior, and with the full belief that they shall thus expiate and wipe away all their former faults.”

Whatever the origin of this tradition, the fact is that many of us will create financial resolutions in the coming days only to find those well-intentioned goals falling short soon after they’re conceived.  One study from sports company Strava, using over 800 million user-logged activities in 2019, found that individuals are likely to give up on their fitness goals by January 19 – less than three weeks into the start of the New Year.

Another study from Scranton University found that only roughly 19% of individuals keep their resolutions for the year.  The data go on to show that the majority of New Year’s resolutions are abandoned by mid-January, confirming findings from many different studies.

Whether you want to admit it or not, the chances are that the work you’re about to put into one or more of your financial resolutions this year likely will soon end in frustration and disappointment.  So, what can you do to ensure that your financial resolutions stay on the right track heading into the New Year?  Well, one way is to focus your goals on “becoming” rather than “doing.”

Becoming Rather than Doing

Let’s face it: the past two years have derailed many of our New Year’s resolutions and life goals as we’ve rightfully focused on doing everything necessary to keep ourselves and our loved ones safe.  Even so, heading into year three of this healthcare crisis, many of us have a choice to set our sights on a bigger goal of thriving financially rather than surviving in day-to-day uncertainty. 

While external circumstances can be a reason for goal failure, they can also be an excuse for not getting to the heart of what’s preventing long-term success with your financial plans.  And quite often, that roadblock is being focused on “doing” the work necessary to achieve a goal, rather than first taking the time to understand who you need to “become” to make your New Year’s Resolution a reality. 

Indeed, some individuals will suggest that the way to improve your odds of achieving your resolution is to ensure that you’re defining SMART goals (Specific, Measurable, Achievable, Relevant, and Time-Bound).  While SMART goals are important, more often than not, what many well-intentioned individuals miss is what needs to happen before specific goal setting begins.  And that is asking yourself: “who do I need to become this year to make my financial resolutions a reality?”

One school of thought suggests that individuals operate in two modes: “Doing” and “Being”.  The Doing Mode individual is focused on explicitly defining a goal, then developing a system to monitor their progress and striving for the future outcome they’re attempting to achieve.  Whether it’s a reward that you plan to give yourself for accomplishing the goal – or a threat, like the potential shame experienced from friends and family – quite often, this carrot and stick approach sets the stage for a possible resolution failure.

When you shift your approach to accomplishing resolutions from Doing Mode to Being Mode, there’s a broader sense of aligning your daily actions, choices, and behaviors with who you are as an individual.  When you approach your goals from a Being Mode, saving more money or investing in a disciplined manner isn’t a task, it’s a way of life – you’re simply doing what’s natural for who you are as an individual.  When positive developments or setbacks occur, they’re viewed as part of the natural process of being rather than a good or bad outcome.

This approach to Being is essential because when your New Year’s resolution is at odds with who you believe yourself to be, you’re more likely to experience self-sabotage and reject the “new” habits you’ve identified for yourself.  Such a disconnect often leads to what psychologists call cognitive dissonance or the mental anguish of holding two competing thoughts simultaneously.  Fortunately, becoming the person who does the desired behaviors is one way to overcome this resistance.

Dealing with Resistance

At first glance, many individuals will dismiss the notion of “becoming” and state that what’s needed is focus, discipline, and a firm commitment to accomplishing goals.  While there’s some truth to this notion, again, the reality is that your subconscious mind does not like to engage in habits or behaviors that conflict with your identity. 

...once you’ve identified who you want to become, achieving your New Year’s Resolution continues to progress by aligning your daily habits with the outcomes necessary to become the person you need to be.

For example, a New Year’s resolution to become more disciplined with your household spending could quickly become derailed if you don’t intrinsically believe that you’re a good steward of your finances.  Indeed, your first misstep after setting a financially prudent resolution likely could prompt negative internal dialogue like, “I’m not good with money” or “I’ll never be good with money, so what’s the point of trying to save.”  When this disconnect arises, it potentially could lead you to abandon a worthwhile goal for the coming year. 

So, how can you overcome this negative self-talk and self-sabotaging behavior?  Well, one way to overcome cognitive dissonance is to either 1) change your thoughts, 2) change your behavior, or 3) justify your behavior by adding new thoughts.  In his book, Atomic Habits, James Clear points out how we are likely to meet resistance when we start new habits inconsistent with our self-image.

For example, a couch potato could have an ambitious goal of completing a marathon in the coming year.  Certainly, willpower and self-discipline likely will lead to some progress initially, that is, until that individual begins to experience setbacks, like an injury or scheduling conflict, naturally leading them to give up on their goal to run a marathon. 

Cast differently, if your goal is to become a runner (rather than accomplishing a running feat, like a marathon), then the daily one-percent improvements that Clear outlines in his book naturally will lead you to get in the kind of shape you need to compete in a marathon.

From this perspective, once you’ve identified who you want to become, achieving your New Year’s Resolution continues to progress by aligning your daily habits with the outcomes necessary to become the person you need to be.  How is this accomplished? 

Well, Clear refers to the work necessary as the Four Laws of Behavior Change:

1. Make it Obvious – list all the steps that need to happen to make your new habit a reality
2. Make it Attractive – link your new routine with behaviors that you already enjoy doing
3. Make it Easy – simplify your environment to make your new habit easy to accomplish
4. Make it Satisfying – create intrinsic rewards when you complete behaviors that align with your identity

Starting with this approach could help you overcome resistance as you put in the work to become the person you want to be this year and accomplish essential life goals.  Now it’s easy to say that an individual who wants to run a marathon should focus on becoming a runner first.

So, who does an individual need to become to save more money or become a more disciplined investor?  From this perspective, consider becoming the master of your financial independence journey.

Becoming the Master of Your Financial Independence Journey

In the simplest terms, financial independence represents a state of financial well-being where you have enough money to pursue experiences of utmost value.  Unless you’re already retired or anticipating a financial windfall, becoming financially independent requires a daily discipline of creating, growing, and preserving financial wealth. 

...a deliberate lack of understanding of what intrinsically motivates you might leave you feeling stuck in a perpetual cycle of earning and spending more but making little headway towards long-term financial goals.

Considering the journey itself, the path to mastery (financial independence) forces you to think outside of the constraints of the money scripts presented to you by other people.  Indeed, pursuing those experiences that satisfy feelings core your value system can activate higher levels of intrinsic motivation and potentially reduce the yo-yo effect of unconscious savings and spending decisions.

What’s more, the journey itself becomes transformative.  For example, each step in the wealth-building process (creating, growing, and preserving wealth) serves an explicit role in helping you move toward financial independence.

Each of these steps requires you to learn disciplines that enable you to build wealth for the long term.  And because the knowledge you’re gaining serves an intrinsically defined purpose, its application likely will have a more profound impact on your achieving financial independence than learning money management techniques simply for the sake of knowledge or to mark off a completed resolution for the year.

Many individuals see their financial choices as discrete win/lose outcomes when it comes down to it.  They think of their behaviors as things that need to be done.  And more often than not, people play the game of life not to lose: settling for comfort rather than striving for a goal for which they may fail.  They’re looking for quick fixes, temporary relief to get them through their day.

While this approach may work initially, a deliberate lack of understanding of what intrinsically motivates you might leave you feeling stuck in a perpetual cycle of earning and spending more but making little headway towards long-term financial goals.

Whether you’re earning six figures and broke, or simply trying to take control of your finances, doing the work of learning a new financial management technique, determining your “retirement number” or achieving some material outcome may not be the approach you need.

What might better suit your situation and help you stay committed to and crush your New Year’s resolution is reframing your relationship with money, rewriting your money scripts, and becoming the master of your financial independence journey.

by Peter Donisanu

From Six Figures and Broke to Financial Independence Master

When Frank began practicing bankruptcy law, his average client earned between $8 to $9 an hour. A decade later, his clients increasingly earn six-figure incomes. And Dave and Beth were one of Frank's high-earning clients. At one point, the couple had amassed over $100,000 in credit card debt and were tapping their home equity line of credit to pay for a lifestyle their family simply couldn't afford. Dave's six-figure annual bonus was enough to cover a large part of his outstanding credit card balances, but the debt kept piling up, and they had little choice but to seek out Frank's services. But it wasn't always like this for the couple.  

Dave and Beth had once lived a frugal lifestyle. Beth came from a working-class family that valued making a dollar go as far as it could. One night, Dave offered to take Beth out to Olive Garden for dinner, but Beth insisted that she stop by the grocery store and prepare a meal for the couple instead. Early on in their relationship, Beth drove a car she received in high school and refused to buy herself a new one until Dave paid off his car. So, what changed over the years? Well, their financial issues began shortly after Dave was transferred to Florida after receiving a big promotion.

Following their move, the couple purchased a four-bedroom home in an affluent, gated Orlando community. Their purchase was more significant than anticipated, yet their house was one of the smallest in the neighborhood. Soon enough, Dave and Beth found themselves surrounded by highly educated, ambitious professionals and entrepreneurs who lived in larger homes, drove nicer cars, were members of the local country club, and sent their kids to private schools.

The couple's desire to fit into their new community, coupled with an anticipation of rising future income, led to a spending spiral to keep up with their neighbors. Dave had hoped that by using his annually granted stock options and bonuses, he would maintain his family's spending habits. However, after a short while, Dave and Beth realized that their consumption habits weren't sustainable, and the couple found themselves stuck in a cycle of spending that led them to Frank's office.  

When Financial Literacy isn't Enough

By the time Dave and Beth met with their attorney, Frank, they barely made the minimum payments on their credit cards and were facing the courts taking control of their family's spending. How did this educated, high-earning couple go from humble means and sound financial stewardship to earning six figures and broke?

A lack of financial literacy wasn't necessarily their problem. Recall that Beth had once embodied the value of stretching a dollar and minimizing unnecessary debt. Even so, she and Dave ended up charging $2,000 per month on clothes their family didn't need.

Dave and Beth's situation is an extreme example of a condition plaguing many high-earning households. You might know someone in a similar situation or maybe have found yourself in the same spot. Either way, this phenomenon is not new. Call it keeping up with the Joneses or hedonic adaptation. Addressing such challenges related to money management and wealth-building has been covered in volumes of books and seminars and are the frequent talking points of tv and radio financial gurus.  

Quick fixes like cutting back on that five-dollar cup of coffee, avoiding debt altogether, or putting your savings on autopilot are often cited, no-brainer remedies to such spend-thrift behavior. Create a budget, develop a financial plan, and stick to it. Simple, right? 

Well, many individuals, especially those well-versed in essential financial literacy topics, continue to find their financial wellbeing rising from a level of financial security up to financial freedom and then back down again to living paycheck to paycheck. Something must be missing from the equation for Dave and Beth and millions of other families just like theirs struggling to take back control of their financial situation. But what's missing?

Living Some Else's Money Script

Often, individuals trying to break free of this vicious financial cycle spend too much time trying to master their money without having a conscious understanding of whose life they're living and how they want their money to make them feel. Indeed, many individuals unconsciously make financial decisions based on money scripts handed down to them by family, friends, or society at large.  

Go to college, get a high-paying job, buy a house, earn more money, join this club, upgrade your car, live in this neighborhood (not that one) and then buy a bigger house. These outcomes, or milestones, represent expectations about how we might feel once specific experiences materialize due to our earning and spending decisions.  

In Dave and Beth's case, their financial choices were dictated by their newly chosen community members' money scripts. Their seemingly fleeting unconscious desire for feelings of love, peace, aliveness, and freedom led them to pour money down a black hole because they were living someone else's money script.

There's nothing wrong with wanting to live in a big house, driving a nice car, or joining a prestigious club. More to the point, what Dave and Beth's story illustrates is that trying to feel emotionally satisfied by chasing someone else's expectations can prove to be a goal as elusive as trying to rid yourself of the pernicious gopher encountered by Bill Murray's character in Caddyshack.  

Feelings Give Purpose to Your Financial Decisions

Here again, Dave and Beth's issues didn't revolve around knowing the proper money management techniques. Instead, their challenges came down to finding the right set of experiences that satiated deeply held emotional cravings. By this point, you're probably asking yourself, "why are we talking about feelings?" Well, the truth is that nearly every financial decision we make is based on a desire to satisfy a complex set of feelings.  

There's no doubt that money can make you feel secure when you use it to pay your rent or mortgage. You likely feel comfortable when you stock your refrigerator and pantry with groceries. Buying your friends a round of drinks at the local pub likely makes you feel accepted. At its core, money represents stored potential to elicit certain feelings through the experiences afforded. 

In the book "Your Money or Your Life," author Joe Dominguez writes how "money… is life energy, or something you trade the hours of your life for… and …is like a mirror that allows [you] to see [yourself]." This truth about money is why many high-earning individuals struggle with growing their wealth for the long-term. Why?  

When financial problems crop up, these individuals are focused on trying to solve the wrong set of problems. Often, the solution to their money problems focuses on learning about new money management techniques. On the contrary, in Dave and Beth's situation, developing a conscious awareness of the kinds of experiences that align with their desired feelings, then crafting a money script around those set of experiences could have helped them master their money.  

The reality is that few individuals are inclined to think or talk about their feelings. It's easier to look at what's worked for other individuals and try to emulate their lives. While some successful people may appear content from the outside, they may be struggling with as much financial discontentment as Dave and Beth. That's why it's essential to start with the end in mind: understand how you want your money to make you feel and identify the kinds of experiences that will get you there. So how do you determine the fitting types of experiences to pursue?

Which Experiences Matter Most to You?

The first step is understanding what matters most in your life. To this end, George Kinder built his life planning program around answering three vital questions:

1. If you had enough money to take care of your needs now and into the future, how would you live your life?
2. If you had five years to live, what would you do with your time?  
3. If you only had 24 hours to live, what did you miss in life, who did you not get to be, what did you not get to do?  

Answering questions like these have helped many individuals identify vital life experiences worth pursuing, and at the same time, gain control over their finances and live more rewarding lives.

Why does this approach work? Science has shown that intrinsically oriented goals, or those that come from within, are more likely to be achieved and produce long-lasting emotional satisfaction. On the other hand, extrinsic pursuits focus on goals like getting a promotion, buying a new car, or losing ten pounds.  Studies have shown that while such reward-pursuing behavior can produce results in the near-term, their value tends to diminish over time and turns up the speed on the hedonic treadmill.  

Indeed, pursuing experiences with the intent of eliciting a specific set of feelings that matter most to you is, by its very nature, an intrinsic goal. So, how can you make an experiences-oriented approach applicable to your life? Spending time with Kinder's three questions is one way to start. What's more helpful, however, is developing a framework in which to put your thoughts, actions, and choices into a broader context. One approach to consider is becoming the master of your financial independence journey.  

Become the Master of Your Financial Independence Journey

In the simplest terms, financial independence represents a state of financial wellbeing where you have enough money to pursue experiences that are of utmost value to you. Unless you're already retired or anticipating a financial windfall, becoming financially independent requires a daily discipline of creating, growing, and preserving financial wealth.  

Considering the journey itself, the path to mastery (financial independence) forces you to think outside of the constraints of the money scripts presented to you by other people. Indeed, pursuing those experiences that satisfy feelings core your value system can activate higher levels of intrinsic motivation and potentially reduce the yo-yo effect of unconscious spending.  

What's more, the journey itself becomes transformative. For example, each step in the wealth-building process (creating, growing, and preserving wealth) serves an explicit role in helping you move toward financial independence.

Each of these steps requires you to learn disciplines that enable you to build wealth for the long-term. And because the knowledge your gaining serves an intrinsically defined purpose, its application likely will have a more profound impact on your achieving financial independence than learning money management techniques simply for the sake of knowledge.  

When it comes down to it, many individuals see their financial choices as discrete win/lose outcomes. And more often than not, people play the game of life simply not to lose: settling for comfort rather than striving for a goal they may fail. They're looking for quick fixes, temporary relief to get them through their day.

While this approach may work initially, a deliberate lack of understanding of what intrinsically motivates you might leave you feeling stuck in a perpetual cycle of earning and spending more but making little headway towards long-term financial goals.

Whether you’re earning six figures and broke like Dave and Beth, or simply trying to take control of your finances, learning a new financial management technique, determining your "retirement number" or some material outcome may not be the approach you need. What might suit your situation better is reframing your relationship with money, rewriting your money scripts and becoming the master of your financial independence journey.

Indeed, endeavoring to master your financial independence journey sets the stage for defining the kinds of essential experiences in your life. Better yet, the journey might ultimately transform you into a fitter financial steward with less stress than you had imagined.  

by Peter Donisanu